Future Investment Initiative summit set to start in Riyadh amid Middle East geopolitical turmoil

Policymakers, top government officials, corporate bosses and finance executives from around the world are descending on the Saudi capital Riyadh this week for the eighth Future Investment Initiative.

The agenda-setting annual summit will explore the theme of how investing today will shape the infinite horizons of tomorrow. However, the ongoing global economic challenges, as well as continued geopolitical headwinds from the Israel-Gaza war are likely to garner equal attention.

The three-day event, starting on October 29, will feature global leaders, entrepreneurs, politicians, chief executives of international banks, experts in artificial intelligence sustainability and energy geoeconomics, as well as leading investment managers running funds with trillions of dollars in assets under management.

Yasir Al Rumayyan, governor of Saudi Arabia’s $925 billion sovereign Public Investment Fund and chairman of state oil giant Saudi Aramco, will set the conference agenda with a keynote speech on Tuesday.

He will then join an on-stage boardroom discussion on geoeconomics with key corporate figures including Moderna chief executive Stéphane Bancel, head of BlackRock Laurence Fink, Citadel founder Kenneth Griffin, Sanofi boss Paul Hudson, president of Alphabet and Google Ruth Porat, Facebook co-founder Eduardo Saverin, as well as chairman of Blackstone Group Stephen Schwarzman and Carlyle co-founder David Rubenstein.

Global banking heavyweights including Citigroup chief executive Jane Fraser, Islamic Development Bank chairman Muhammad Al Jasser, Morgan Stanley chief executive Ted Pick, Goldman Sachs chairman David Solomon, Sumitomo Mitsui Bank’s chairman Makoto Takashima and Bill Winters, group chief executive of Standard Chartered Bank, will join other leading asset managers for discussions.

While the heavyweights of the corporate and the finance worlds will discuss investment themes and how to broaden the horizons to new economy sectors, any debate will be heavily influenced by the current weakness in the global economy and the war in the Middle East marring any chances of a quick recovery.

Although the International Monetary Fund maintained its 2024 projection for the global economy amid softening inflation, it warned of “a high degree of uncertainty” casting shadows on the outlook. Beyond one-year projections, the global economy is facing a feeble period of medium-term growth.

“For many advanced and emerging market economies, the five-year-ahead forecast is weaker than the one-year-ahead forecast … suggesting that persistent headwinds to growth will remain prevalent over the medium term,” the Washington-based fund said on Tuesday.

The IMF estimates the global output to grow by 3.2 per cent in 2024 and in 2025, unchanged from its July's estimates. However, it made “sizeable downside” revisions to low-income and developing countries, due to intensifying conflicts, IMF director of research Pierre-Olivier Gourinchas said.

The fund has also lowered its outlook for the Middle East and North Africa region by 0.6 per cent this year from its April forecast to 2.1 per cent , underpinned by Saudi Arabia’s oil production cuts and the conflicts in the region.

Although the fund said it is too early to predict specific impacts of the ongoing war on the global economy, economies in the region have already suffered greatly, especially in Gaza.

Gaza's gross domestic product dropped by nearly 86 per cent in the first half of the year due to Israel’s attacks, which have caused extensive destruction, while the occupied West Bank's first-half GDP had declined 25 per cent, with a possibility of further drop, IMF spokeswoman Julie Kozack told a news briefing on October 4.

Israel's own economy shrank by about 20 per cent in the fourth quarter of last year, and although there was some recovery, it remained only partial during the January-June period this year, she said at the time.

Reverberations from the conflict have hit oil prices, which have remained volatile in the past few months as the fighting spread beyond the Gaza borders to Lebanon. Iran launched a barrage of missiles at targets in Israel at the beginning of October, its second such salvo this year, with Israel retaliating on Saturday by striking military targets in Tehran, which left two soldiers dead.

Analysts say energy prices will rise sharply if there is a direct military conflict between Israel and Iran and this will impact the global economic momentum and trade.

The Gaza war, which entered its second year this month, will shape the discussions in Riyadh, including around potential scenarios for the global energy markets as well as the corporate and financial world.

Saudi Energy Minister Prince Abdulaziz bin Salman and Aramco chief executive Amin Nasser will discuss emerging scenarios in the global energy markets during two different panel discussions on the first day of the conference.

Later, Khalid Al Falih, the kingdom’s Minister of Investment, will join Piyush Goyal, India’s Minister of Commerce and Industry, Turkey’s Minister of Treasury and Finance Mehmet Şimşek, UK Minister of Trade Douglas Alexander, Bridgwater founder Ray Dalio and International Finance Corporation managing director Makhtar Diop to weigh up what lies ahead for policymakers and how they can balance optimism with caution.

TikTok chief executive Shou Zi Chew and SoftBank Group chairman and chief executive Masayoshi Son will also address delegates in the FII Titan of Industry series.

The FII this year is holding sessions on Africa and the prospects of investment in some of the continent's fast-growing economies, a day ahead of the three-day summit. The Africa series, which will feature speakers from sectors including government, energy, corporate and banking, will be followed by panel discussions exploring how women in the financial world can be the game-changers.

Addresses and panel discussions on day two and three of the summit will explore climate impact and investment opportunities in infrastructure, green transition, technology and innovation, as well as the geopolitics of technology, global supply chains and prospects of investment in different geographies and asset classes.

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